Tuesday, December 28, 2010

We sent out an email blast to our clients with known NY Operations, but I'm reposting it here in case I missed anyone... If you don't care about NY wage and hour law, stop reading. And I mean it.

The NY Legislature took a big step towards full employment for wage and hour lawyers with the passage of the Wage Theft Protection Act. This new law, signed by outgoing NY Governor David Patterson on December 13, 2010, will become effective on April 12, 2011. Employers should start preparing now.

To summarize, this new law requires employers to provide additional information regarding wage payments, and imposes stiff penalties for employers who fail to comply with their wage payment obligations.

Highlights of the New Legislation

Ø Enhanced Notice Requirements: New York wage law already requires employers to give new employees written notice of their rate(s) of pay, overtime rate (if applicable) and regularly scheduled paydays. Employers must also state whether the employee is paid by the hour, shift, day, week, piece, commission, etc., and any intent to claim allowances (e.g., tip, meal or lodging allowances) as part of the minimum wage. Additionally, the notice must include the employer's name, any "doing business as" name, and the employer's physical address, mailing address (if different) and telephone number.

The Act requires employers to give employees notice not only at the time of hire, but also annually, on or before February 1 of each year. Notice must be given in both English and the employee's native language, and employees must acknowledge receipt in writing. Also, employers must provide at least seven calendar days' notice of any changes to the information required to be disclosed, unless the changes are reflected in new wage statements accompanying employees' pay.

Employers must maintain employee notice and acknowledgment records for a period of six years. If notice is not provided to employees within 10 days of initial employment, employers will be subject to penalties of $50 per employee, per week (up to $2,500), in addition to costs and reasonable attorney's fees. The Act permits the New York Labor Commissioner to bring an enforcement action and to seek additional penalties for noncompliance with this requirement.

Ø Employee Wage Statements: The Act requires employers to provide wage statements to their employees with each paycheck specifying the: (1) dates of the applicable pay period; (2) employee's name; (3) employer's name, address and telephone number; (4) rate and basis of pay; and (5) allowances, if any, claimed as part of the minimum wage. For non-exempt employees, the statement must also include the applicable regular and overtime pay rates, in addition to the number of regular and overtime hours worked during the pay period. Payroll records containing this information must be maintained for six years (up from three years). Violations can result in civil damages of $100 for each workweek that the violation occurred (not exceeding $2,500), in addition to costs and reasonable attorney's fees. Additional penalties may be sought and awarded in actions for noncompliance brought by the New York Labor Commissioner on an employee's behalf.

Ø Increased Civil/Criminal Penalties: The Act provides for increasingly strict penalties against employers who fail to pay their employees properly. First, the Act permits liquidated damages against an employer of up to 100% of the total amount of wages found to be due (up from 25% under existing law), unless an employer can prove it had a good faith basis for believing that it was in compliance with the law. Additionally, employers found liable who fail to pay the amount owed pursuant to a final judgment within 90 days will now be assessed an additional 15% in damages. The Act provides for the employee's recovery of prejudgment interest and reasonable attorney's fees in any civil action to recover unpaid wages.

The Act also imposes more stringent criminal penalties for failure to pay minimum wage or overtime wages due. It provides that an employer (including the officers or agents of any corporation, partnership or limited liability company)found not to have paid an employee's wages is guilty of a misdemeanor and will be fined between $500 and $20,000 or be imprisoned for less than one year for each offense. The Act treats each failure to pay employee wages within any workweek as a separately actionable offense. Repeat offenses may result in felony charges, more fines, and up to one year in jail. The Act threatens similar criminal penalties against employers who fail to maintain adequate employee wage records. Initial violations will be deemed misdemeanors, with fines between $500 and $5,000, or up to one year of imprisonment. For subsequent record violations, employers may face felony fines of between $5,000 and $20,000, imprisonment for a period of not more than a year and one day, or both.

Ø Posting Requirement: Employers found liable under the Act may be ordered by the Labor Commissioner to conspicuously post documentation explaining the violation(s) for up to one year.

Ø Whistleblower Protections: The Act also strengthens protections for whistleblowers in cases involving wage violations. Significantly, the Act protects employees from unlawful reprisal (including threats of retaliation) who raise a complaint based upon a "reasonable" and "good faith" belief that their employer has violated the law--even if no violation actually occurred. It also protects employees who assist in the investigation of another employee's complaint, or who have otherwise exercised rights protected by the Act. Upon a finding of retaliation, the Labor Commissioner may award compensatory and liquidated damages (not to exceed $10,000), enjoin acts of retaliation, and order injunctive relief, which may include employee reinstatement. Employees also may make claims of retaliation in court, with similar remedies awarded. Retaliation claims must be made within two years of the alleged retaliatory act, although the two-year statute of limitation is tolled by the filing of an administrative charge with the Labor Department.

To ensure compliance, and avoid the significant penalties for violations, employers with New York operations should carefully review the full text of the New York Wage Theft Prevention Act, which can be found here: http://open.nysenate.gov/legislation/bill/S8380 . Employers must also review and revise their pay practices by the Act's April 12, 2011, effective date.

Thanks to my pal and competitor Tony Rao for pointing this out and thanks to Alex Sperry of our Sacramento office for drafting the analysis.

Tuesday, December 21, 2010

The National Labor Relations Board is proposing a regulation that requires all employers under the NLRB's jurisdiction - both union and non-union- to post a notice explaining to employees their rights under the National Labor Relations Act. That notice will include helpful information like how to file an unfair labor practice complaint, the right to collectively bargain and elect a union, etc. The entire contents of the notice is posted below. The proposed regulations currently require qualifying employers to post the notice on paper with the other millions of government posters, and also send the notice out by email or put it on a company intranet. Multiple languages, etc. too.

The proposed regulations are here. A "fact sheet" is here. Read the whole proposed poster below.

This NLRB is on a tear and it won't be long before private sector employers will have to wake up and smell the union. This time I may have to dust off my copy of The Developing Labor Law. My competitors may have to dust off their labor lawyers. OK, I kid! I had too many cookies.

DGV

“EMPLOYEE RIGHTS UNDER THE NATIONAL LABOR RELATIONS ACT

“The National Labor Relations Act (NLRA) guarantees the right of employees to organize and bargain collectively with their employers, and to engage in other protected concerted activity. Employees covered by the NLRA* are protected from certain types of employer and union misconduct. This Notice gives you general information about your rights, and about the obligations of employers and unions under the NLRA. Contact the National Labor Relations Board (NLRB), the Federal agency that investigates and resolves complaints under the NLRA, using the contact information supplied below, if you have any questions about specific rights that may apply in your particular workplace.

“Under the NLRA, you have the right to:

• Organize a union to negotiate with your employer concerning your wages, hours, and other terms and conditions of employment.
• Form, join or assist a union.
• Bargain collectively through representatives of employees’ own choosing for a contract with your employer setting your wages, benefits, hours, and other working conditions.
• Discuss your terms and conditions of employment or union organizing with your co-workers or a union.
• Take action with one or more co-workers to improve your working conditions by, among other means, raising work-related complaints directly with your employer or with a government agency, and seeking help from a union.
• Strike and picket, depending on the purpose or means of the strike or the picketing.
• Choose not to do any of these activities, including joining or remaining a member of a union.

“Under the NLRA, it is illegal for your employer to:

• Prohibit you from soliciting for a union during non-work time, such as before or after work or during break times; or from distributing union literature during non-work time, in non-work areas, such as parking lots or break rooms.
• Question you about your union support or activities in a manner that discourages you from engaging in that activity.
• Fire, demote, or transfer you, or reduce your hours or change your shift, or otherwise take adverse action against you, or threaten to take any of these actions, because you join or support a union, or because you
engage in concerted activity for mutual aid and protection, or because you choose not to engage in any such activity.
• Threaten to close your workplace if workers choose a union to represent them.
• Promise or grant promotions, pay raises, or other benefits to discourage or encourage union support.
• Prohibit you from wearing union hats, buttons, t-shirts, and pins in the workplace except under special circumstances.
• Spy on or videotape peaceful union activities and gatherings or pretend to do so.

“Under the NLRA, it is illegal for a union or for the union that represents you in bargaining with your employer to:
• Threaten you that you will lose your job unless you support the union.
• Refuse to process a grievance because you have criticized union officials or because you are not a member of the union.
• Use or maintain discriminatory standards or procedures in making job referrals from a hiring hall.
• Cause or attempt to cause an employer to discriminate against you because of your union-related activity.
• Take other adverse action against you based on whether you have joined or support the union.

“If you and your co-workers select a union to act as your collective bargaining representative, your employer and the union are required to bargain in good faith in a genuine effort to reach a written, binding agreement setting your terms and conditions of employment. The union is required to fairly represent you in bargaining and enforcing the agreement.

“Illegal conduct will not be permitted. If you believe your rights or the rights of others have been violated, you should contact the NLRB promptly to protect your rights, generally within six months of the unlawful activity. You may inquire about possible violations without your employer or anyone else being informed of the inquiry. Charges may be filed by any person and need not be filed by the employee directly affected by the
violation. The NLRB may order an employer to rehire a worker fired in violation of the law and to pay lost wages and benefits, and may order an employer or union to cease violating the law. Employees should seek assistance from the nearest regional NLRB office, which can be found on the Agency’s website:

www.nlrb.gov.

You can also contact the NLRB by calling toll-free: 1-866-667-NLRB (6572) or (TTY) 1-866-315-NLRB (1-866-315-6572) for hearing impaired.
“*The National Labor Relations Act covers most private-sector employers. Excluded from coverage under the NLRA are public-sector employees, agricultural and domestic workers, independent contractors, workers employed by a parent or spouse, employees of air and rail carriers covered by the Railway Labor Act, and supervisors (although supervisors that have been discriminated against for refusing to violate the
NLRA may be covered).

“This is an official Government Notice and must not be defaced by anyone.”

The helpful folks at the U.S. Department of Labor wants you to know about the new federal requirement that employers grant time off for women to express breast milk. The DOL's fact sheet is posted here.
You may recall this requirement was included in the "healthcare reform" law. I have not yet seen any legislative effort to grant male workers equal rights in this area. But hope springs eternal.
DGV

Monday, December 20, 2010

Yeah, another day, another award. We were included in the Delaware Employment Law Blog's top 100 employment law blogs. See the post here. We're # 17, even. But it seems they grouped them by certain criteria, and then ordered them alphabetically. So, who knows whether they just like us or REALLY really like us. Disirregardless, it's an honor to be read and recognized. So, thank you Delaware Employment Law Blog!

Besides tooting our horn, the purpose of this post is to give you access to at least 100 employment law blogs that post in different states, on a variety of topics. The folks at the DELB put a lot of time and effort into compiling this information, not to mention their substantive posting over there. Take advantage of all their hard work.Knowledge is POWER people! Whew. I just got all red and stuff.

Saturday, December 18, 2010

If an employer "outsources" payroll services to another company, can that payroll service company be held liable for wage-hour violations as an "employer?" No.

The California Supreme Court in Martinez v. Combs (discussed here) determined who is liable under California wage and hour law - i.e., who is an "employer." The court of appeal in Futrell v. Payday California, Inc., applied Martinez's definition of "employer" in deciding that a payroll service provider was not an "employer."

Futrell provided private police / crowd control services for a Reactor, a production company that makes commercials. The production company "payrolled" its employees through Payday, a payroll service company. Futrell brought a class action against Payday, alleging wage-hour violations. Payday prevailed on a motion for summary judgment because the trial court held Payday was just a vendor of Futrell's actual employer, the production company.

The court of appeal held that Martinez restricts who may be held liable for wage-hour violations. The court rejected Futrell's argument that Payday exercised control over his wages:

There is no evidence in the record showing Payday exercised any control over Futrell‟s hours or working conditions. Reactor hired Futrell, and arranged and supervised the location shoots. . . . This means the only possible linchpin for finding that Payday was Futrell‟s employer is whether Payday “exercised control over his wages.”

If Payday had merely collected tax information from workers, kept track of time cards, calculated pay and tax withholding, and submitted reports to Reactor detailing such information, leaving it for Reactor to issue paychecks to the workers on its productions, we would have an easy case; Reactor would be the only employer. In our view, the issue in this case then comes down to whether Payday exercised “control over workers‟ wages” by going beyond handling the ministerial tasks of calculating pay and tax withholding, and by also issuing paychecks, drawn on its own bank account. We think not.

. . .. . Writing on a clean slate, we conclude that “control over wages” means that a person or entity has the power or authority to negotiate and set an employee‟s rate of pay, and not that a person or entity is physically involved in the preparation of an employee‟s paycheck. This is the only definition that makes sense. The task of preparing payroll, whether done by an internal division or department of an employer, or by an outside vendor of an employer, does not make Payday an employer for purposes of liability for wages under the Labor Code wage statutes.

The court then reached a similar conclusion under the federal Fair Labor Standards Act:

Although the FLSA applies a slightly different test than California law, the predominant factor remains the control an alleged employer exercises over an employee. Incorporating the reasons explained above into the FLSA test, we find Payday was not Futrell‟s employer for purposes of the FLSA. The economic reality existing between Futrell and Payday is that the latter prepared paychecks for the former for the work he performed on behalf of his actual employer, Reactor.

This case will come as good news to PEOs and other HR outsourcing companies, who may have been sued as "joint employers" for wage and hour violations. The court here, though, held that nothing in the opinion affects the analysis of who is the "employer" under any other body of law except wage-hour.

The case is Futrell v. Payday California, Inc. and the opinion is here.

Friday, December 17, 2010

San Francisco has its own minimum wage law. It is indexed to inflation. It did not rise in 2010. However, it's rising as of 1/1/2011. The new rate will be $9.92 per hour. There of course is a new poster! Get information here.

Wednesday, December 15, 2010

Overhill Farms received notice from the IRS that hundreds of its employees' social security numbers were invalid. The company gave employees a chance to correct the problem. Those who did not were terminated. The law imposes fines and potential criminal liability on employers who permit employees to work with false social security numbers.

Led by an activist organization, some of the terminated employees began protesting at Overhill. The protestors accused Overhill of being racists and ageists, and all kinds of other -ists because of the termination decision based on the IRS's action. The leaflets they handed out said, among other things:

“OVERHILL FARMS UNFAIR and RACIST EMPLOYER.” The leaflets distributed at the protests contained the heading “OVERHILL FARMS UNFAIR AND RACIST.” Overhill is “[a]n abusive and racist employer in the manner that it treats its workers,” which “discriminates against Latinos”; has “unfairly terminated 300 workers,” has “fired workers for expressing themselves freely according to the First Amendment of the U.S. Constitution,” has “exploited Latinos for 30, 20, 15 and 10 years and then threw them to the streets — many single female heads-of-household,” and has exploited part-time workers “visciously as if modern slavery were in place.”

Well, Overhill fought back. It sued the protestors for a variety of torts, including defamation, interference with prospective economic advantage, and unfair business practices. But the protesters challenged the lawsuit as a "SLAPP" - a lawsuit in retaliation for their First Amendment activity - protesting.
Protesting of course is protected by the First Amendment. But the First Amendment does not protect against libel - provably false statements of fact. Certain types of false statements have to be made with malice to constitute defamation.

The court of appeal said that merely calling Overhill "racist" was not defamatory:

We agree that general statements charging a person with being racist, unfair, or unjust – without more – such as contained in the signs carried by protestors, constitute mere name calling and do not contain a provably false assertion of fact. Similarly, references to general discriminatory treatment, such as that contained in the handbill and flyer here, without more, do not constitute provably false assertions of fact. (See, e.g., Beverly Hills Foodland v. United Food & Commercial Workers Union, Local 655 (8th Cir. 1994) 39 F.3d 191, 196 [“‘[T]o use loose language or undefined slogans that are part of the conventional give and take in our economic political controversies — like ‘unfair’ and ‘fascist’ — is not to falsify facts.’ [Citations.]”].)

But, the protestors went further:

The press release contains language which expressly accuses it of engaging in racist firings and declaims upon the disparate impact the firings have had on “immigrant women.” Similarly, after discussing Overhill’s termination of one-fourth of Overhill’s work-force, the leaflets explicitly assert that the discrepancy in social security numbers was merely a “pretext” to eliminate certain workers, and refers to Overhill’s conduct as “racist and discriminatory abuse against Latina women immigrants.” Moreover, in almost every instance, defendants’ characterization of Overhill as “racist” is supported by a specific reference to its decision to terminate the employment of a large group of Latino immigrant workers. The assertion of racism, when viewed in that specific factual context, is not merely a hyperbolic characterization of Overhill’s black corporate heart – it represents an accusation of concrete, wrongful conduct.

The court therefore held that generally calling someone racist is hyperbole. But saying that an employer fired an employee due to unlawful discriminatory motive is a provable assertion of fact. That conclusion could have ripple effects beyond protesting. For, if this opinion stands, when an employee alleges wrongful termination due to discrimination, retaliation, etc., an employer is within its right to sue for defamation if it can prove that the statement is false.

The decision was 2-1. The dissent said:

I part company with the majority opinion in two fundamental respects. First, my colleagues in the majority have incorrectly made this court the first state or federal appellate court in America, ever, to hold that the epithet “racist” constitutes a provably false assertion of fact as the basis of a claim of defamation. The majority attempts to argue that it is only so holding because the term “racist” was used in combination with other words. But those other words are not actionable and the majority does not and cannot argue otherwise. Whether the word “racist” is used as a noun or an adjective in combination with other words does not matter.

Second, in my view, the majority misapplies the United States Supreme Court opinions in Milkovich v. Lorain Journal Co., supra, 497 U.S. at page 19 and Linn v. United Plant Guard Workers (1966) 383 U.S. 53, 58. Defendants’ communications in their dispute with their employer simply did not contain a provably false fact and the reasons for their allegations were disclosed. (Franklin, supra, 116 Cal.App.4th at p. 387.) The majority opinion’s parsing of the one word “discrepancies” in reaching its conclusion is not consistent with United States Supreme Court jurisprudence in defamation cases. I agree the employees’ claims might not be persuasive, but that does not make them defamatory.

My thought is that the California or US Supreme Court will take up this case. A lot of former employees accuse their employers of being "racist" or discriminatory in making employment decisions. One can imagine the argument that this decision will interfere with the enforcement of the civil rights laws. One can also argue that the term "racist" or "discriminatory" is a powerful weapon and should not be tossed around without a factual basis to back it up. There's the rub. We'll see what happens next.

Tuesday, December 07, 2010

So, I have posted on Dukes v. Walmart for a few years now... here and here. This is the class action involving potentially 1.5 million current and former Walmart employees all over the country.
The U.S. Supreme Court decided to consider some issues that arise in federal class actions:

Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2)—which by its terms is limited to injunctive or corresponding declaratory relief—and, if so, under what circumstances.

and

Whether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a).

Federal Rule of Civil Procedure 23 governs class actions. So, that's what the court is referring to above. In essence the court is deciding whether and to what extent a court can order money to be paid if a class action is certified under Rule 23(b)(2), which is supposed to apply only to class actions seeking injunctions.

Yes, on the surface, the legal issues may read like real snoozers for HR and most employment lawyers. But the case is gold for civil procedure junkies. And don't let all that civil procedure jargon fool you. The stakes are incredibly high and the court has the opportunity to shape how federal class actions in discrimination cases may be asserted. The court's decision could well shape how multi-state employers implement policies to avoid class action treatment of seemingly unrelated decisions.... So, stay tuned!